The Pallasades shopping centre is to be sold to make way for the £350 million redevelopment of Birmingham New Street Station.

The centre owner, The Mall, does not want to be involved in the revamp of the city's main rail hub which sits underneath the shopping complex.

Meanwhile, it also emerged the New Street Station project - creating five times the passenger capacity and a landmark city "gateway" - is in a race against time to be completed before the London Olympics in 2012.

Ken Ford, chief executive of The Mall, said: "Following a number of unsolicited approaches from interested parties, we have decided to explore selling our interest in The Mall, Pallasades.

"The Mall, as the UK's leading owner and operator of community shopping centres, does not, as a rule, participate in redevelopment projects of this scale.

"This presents a terrific opportunity to participate in one of the most eagerly anticipated regeneration projects in the UK."

The Mall recently spent £1.5 million on a bridge link between the Pallasades and the Bullring and has about 250,000 shoppers every week.

Mike Taylor, the Birmingham City Council officer heading the New Street Steering Group, gave more details of the scheme to business leaders yesterday.

He told the Birmingham Forward meeting: "I have to begin with an apology, I am afraid.

"The Pallasades is on the market and the lawyers have insisted that some images cannot be shown to you at the moment." He added the remodelling of the pedestrian access from New Street was an aspect of the design about which he had to be "careful".

"There is a tremendous opportunity to reconfigure The Pallasades and a tremendous opportunity to improve the retail offer there."

Mr Taylor added people would have to "read between the lines" at the moment.

Construction of the project, first revealed by The Birmingham Post, could start next year.

Even though the development will be progressed in phases to keep much of the station open throughout the four or five-year construction period, the backers said completion by 2011 was crucial.

"That is the year before the Olympics and everyone across the country is using 2011 as a critical factor.

"Obviously we want as many people as possible to come to Birmingham when the Games are on."

Mr Taylor also revealed the plans purposely allowed for a £1 billion underground tunnel to increase rail capacity at the station in the future.

The tunnel plan, part of West Midlands transport policy since the 1990s, was frozen by the financial chaos the rail industry found itself in after the Hatfield crash in 2000.

Mr Taylor added the project was not "a done deal" yet and both private and public sector funding was still to be secured. A deputation of Birmingham business leaders will lobby MPs next week about the importance of the New Street scheme.